Understanding the Business Success of the Clorox Company

The Clorox Company Logo

The Clorox Company was first founded in 1913. The founders of the Clorox Company were five entrepreneurs who pooled their assets together for a small investment that would be the first commercial production bleach facility located on the West Coast in California. The original name for the firm was the Electro Alkaline Company, and the company began producing bleach for household use in 1917. They went public in 1928. The headquarters for the Clorox Company is currently located in Oakland, California. Clorox currently employs around 8,400 people.

Growth into a Household Brand

Procter & Gamble bought Clorox Company in 1957, but the FTC challenged the deal on the basis that the acquisition was detrimental to competition in the household goods market. Clorox Company was independent again in 1969. Thereafter, Clorox quickly built a reputation as an industry leader in cleaning and household sectors due to a variety of divergent product releases. Some, but not all of Clorox Company’s product releases, have been successful over the past four decades. Clorox’s most prominent brands include Brita water filters, Glad storage bags, Hidden Valley Ranch, Kingsford charcoal, Pine Sol, Clorox bleach, and a few other cleaners like Tilex. Since its second quarter 2013 earnings release, many analysts currently remain neutral on Clorox Company.

Clorox Company’s Recent Performance

Clorox Company revenue totaled $1.3 billion for the second quarter of fiscal year 2013, increasing around 8.5 percent year over year. Clorox Company’s net income for the second quarter of fiscal year 2013 totaled $123 million, increasing 17 percent. Both revenue and net income increased by high single-digit margins during the first half of Clorox Company’s fiscal 2013 in comparison to the previous year. Analysts note Clorox’s improved revenues and earnings but are wary of the increasing prices of raw materials alongside potential currency situations abroad in Venezuela. However, analysts do expect Clorox Company’s cost savings and price increase initiatives to help improve operating margins and gross margins throughout 2013.

Clorox Company’s Global Imprint

Clorox Company’s fiscal 2012 revenues totaled $5.5 billion. This U.S. based food and chemical products manufacturer trades publicly on the New York Stock Exchange as CLX. Around 90 percent of Clorox’s brands dominate market share at the top one or two positions in their respective sectors. Clorox markets products to over 100 different countries and manufactures products in over 24 countries. Investors like Clorox Company because the firm has consistently increased the dividend every year for over three decades now. Clorox has also repurchased around 40 percent of the shares over the past ten years. Consumers expressed a strong preference for 48 percent of Clorox Company’s portfolio in 2012, increasing from 34 percent in 2007.

Resilience through the Recession

Clorox Company stock was able to outperform the S&P 500 throughout the recession since 2008. Clorox has been able to save around $15 million annually by undergoing reductions in energy and water consumption while sales increased 40 percent from better sustainability claims. Clorox Company places an emphasis to a focus on providing a fostering environment for employee engagement and workforce diversity as well. However, Clorox has been accused of different unethical practices surrounding its green products by competitors and others. These charges typically center on using sustainability and the green trend to push sales while failing to follow through on the environmental commitments in the backend operations. Clorox currently has a strong portfolio of household products, and has the potential to increase earnings as it continues to improve sustainability initiatives.

Notice: The logo of The Clorox Company is used here to serve as the primary means of visual identification at the top of the article dedicated to the entity in question. It does not imply any affiliation or endorsement of CosmoBC.com.

Ronald Ellinghouse is a valued contributor to CosmoBC's BizBlog.

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